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Shaughnessy, Kniep, Hawe Paper Co. v. Fettergroup

United States District Court, Eastern District of Missouri, Eastern Division

March 30, 2015




This matter is before the Court on Defendants Fetter Printing Company and John Roos' Motion to Dismiss (Doc. 10). The motion is fully briefed and ready for disposition. For the following reasons, the motion will be GRANTED in part.

I. Motion to Dismiss Standard of Review

In ruling on a motion to dismiss, the Court must view the allegations in the Complaint liberally in the light most favorable to the plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008) (citing Luney v. SGS Auto Servs., 432 F.3d 866, 867 (8th Cir. 2005)). Additionally, the Court "must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005) (citation omitted). To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555; Huang v. Gateway Hotel Holdings, 520 F.Supp.2d 1137, 1140 (E.D. Mo. 2007).

II. Background

Plaintiff Shaughnessy, Kniep, Hawe Paper Company ("Shaughnessy") prints and distributes various paper products (Doc. 1 at ¶ 9). Defendant Fetter Printing Company ("Fetter"), one of Plaintiffs former clients, sells printed labels to companies in the painting and coating industry (Id. at ¶¶10, 11)- Defendant John J. Roos ("Roos") is Fetter's Chief Financial Officer (Id. at ¶ 14).

Beginning in April 2005 and continuing for more than eight (8) years, Shaughnessy provided Fetter with specially manufactured paper (the "Custom Paper")[1] (Id. at ¶11). On April 15, 2005, Fetter executed a credit application (the "Credit Application") and delivered it to Shaughnessy (Id. at ¶12). In relevant part, the Credit Application reads as follows:

In consideration of the extension of credit by [Shaughnessy] to [Fetter], [Fetter] agrees to promptly pay all bills in accordance with the terms expressed on the invoice. [Fetter] agrees that [Shaughnessy] shall retain a purchase money security interest in all goods and services purchased by us until payment in full has been received by [Shaughnessy]. [Fetter] further agrees that if the goods and services ordered by [Fetter] or any other designated person shall remain unpaid past the invoice due date, any balance so remaining unpaid shall bear interest at the lesser of the rate of l3/4% per month or the maximum rate permitted by applicable law, until paid. In the event that any suit or action is instated to collect amount due on our account, whether principle [sic] interest or both, [Fetter] agrees to pay, in addition to the amount owed, all legal fees and collection agency fees incurred, including a reasonable sum for attorney's fees.

Id). In the course of their regular dealings, every Monday Shaughnessy would send Roos a document titled "Fetter Customer Held" (the "Inventory Statement") that was a then-current listing of the Custom Paper that Shaughnessy was holding for Fetter's purchase (Id. at ¶¶14, 15). Based on this Document, Roos would then place an order of the Custom Paper (Id. at ¶16). Monthly, a representative of Shaughnessy would meet with Roos to review the current Inventory Statement and request Shaughnessy purchase additional Custom Paper (Id. at ¶¶ 7-19). Based on these representations, Shaughnessy would order the Custom Paper (Id. at ¶ 20). Given the levels of Custom Paper requested by Fetter, Shaughnessy was required to procure Custom Paper with a twelve-week lead time (Id. at ¶21).

In January 2013, Roos notified Shaughnessy that Fetter had reached an agreement with Fort Dearborn Company ("Fort Dearborn") whereby the paint label segment of Fetter's business would be sold to Fort Dearborn (Id. at ¶23). During this conversation, Roos informed Shaughnessy that Fetter would continue to perform under the established course of dealing until the sale of Fetter's business to Fort Dearborn was complete (Id. at ¶25) (hereinafter the "First Representation"). Roos also told Shaughnessy that Fetter and Fort Dearborn had agreed that, upon the sale of Fetter's printing business, the remaining Custom Paper inventory held by Shaughnessy would be purchased by Fort Dearborn (Id. at ¶26) (hereinafter the "Second Representation"). Beginning on March 4, 2013, Shaughnessy included Fort Dearborn's Procurement Director on the distribution list for the Inventory Statements (Id. at ¶27).

In or about June of 2013, Fetter notified Shaughnessy that it would no longer purchase the Custom Paper from Shaughnessy (Id. at ¶ 28). Further, Fetter told Shaughnessy that Fort Dearborn would not be purchasing the remaining Custom Paper inventory (Id. at ¶ 29). At the time of this conversation, the dollar value of Shaughnessy's Custom Paper inventory totaled $371, 426.12 (Id. at ¶ 30). In support of this statement, Shaughnessy provides an inventory statement as an attachment to the complaint (Doc. 1-1).

On February 2, 2014, Shaughnessy filed this action alleging Breach of Contract against Fetter (Count I) and Negligent Misrepresentation against Fetter and Roos (Count II). Shaughnessy alleges that the course of dealing together with the credit application, Inventory Statements and other writings, constitute an enforceable contract for the sale of specially manufactured goods (Id. at 22). Defendants move to dismiss the Complaint pursuant to Rule 12(b)(6) because (1) Fetter was not legally obligated to purchase the inventory in question and (2) Shaughnessy's complaint does not state a claim for negligent misrepresentation.

III. Analysis

A. Count I: Breach of Contract

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